What consumer sentiment says about the economy

Jeremy Hobson: This Friday, we're going to get a piece of economic data that comes once a month and is watched closely by economists and investors: the consumer sentiment figure. It's a measure of how consumers are feeling about the economy, and it's put together by Thomson Reuters and the University of Michigan.

We've got the professor behind the number here in the studio in Ann Arbor to talk with us now. Richard Curtain, good morning.

Richard Curtin: Good morning.

Hobson: Well I want to start with some of the people that we've been talking to across the state of Michigan, and get your reaction. Let's take a listen:

It's getting better. From where I stand, it's just down.

It could use some work.

I think it's improving.

The economy seems to be picking up, slowly but surely.

It's a little down right now, but I think it's going to come back up.

I think it's a recovery.

So a lot of different viewpoints about the state of the economy. What do you make of that?

Curtin: Well, it's typical. The thrust of what they said is reflected in the national research -- that people think it's improving, but they don't think it's there yet.

Hobson: And is this how you do your survey -- you just go out and ask people how they're feeling about the economy?

Curtin: We do. Every household in the United States has an equal probability of being selected. And we start out with the very simple question: How are you doing, and why? And they tell us in their own words.

Hobson: You have been doing this for so long -- you obviously think this is an extremely important thing for us to know. Why is that?

Curtin: Insuring the welfare of consumers is certainly an important part, and I think an important component of that welfare is that people feel satisfied with their own situation and are optimistic about the future.

Hobson: We're here this week because there's a primary here in Michigan next Tuesday. What do these consumer sentiment numbers mean for politicians, for elections?

Curtin: If you look at the long history of our series, going back to the early '50s, it's never misforecasted who the eventual winner was. And this time, the data is strongly against President Obama. If you ask consumers about the economy, they say it's improving, especially unemployment. You ask a consumer about how they are doing personally, and it's near the worst level it's ever been.

Hobson: So they're saying things are getting better broadly, but for me, I'm not seeing it yet.

Curtin: Yes, and more and more people will get less satisfied with their current situation knowing that the economy is improving, and why they're not taking part of it. And so I think this will certainly be in the broader period we think of as the economic difficulties of this age.